Disparity in Solvency Norms: A Concern for Small Contractors in Punjab

*BY RAJAT KUMAR MOHINDRU
The Punjab Water Resources Department (PWRD) introduced revised norms for solvency certificates in August 2022, increasing the required amount from ₹5 lakhs to ₹25 lakhs for contractor registration. Surprisingly, the Public Works Department (PWD) in Punjab continues to register firms with the earlier solvency requirement of ₹5 lakhs, raising questions about consistency and fairness across departments.
Prior to August 2022, small contractors and suppliers could register with the PWRD by submitting a solvency certificate of ₹5 lakhs. This allowed them to undertake civil works up to ₹12.5 lakhs—a feasible threshold for small-scale firms. However, the revised norms now require a minimum solvency of ₹25 lakhs, enabling contractors to execute works worth up to ₹75 lakhs.
This sudden fivefold hike has put small contractors and firms in a difficult position. While the PWD still allows registration with a ₹5 lakh solvency certificate, the PWRD’s more stringent requirement seems to overlook the needs of small and emerging businesses.
If the government intended to raise the solvency requirement, it should have also introduced a new "E-Class" contractor category within the PWRD. This class could be designed specifically for small firms, with a maximum work limit of ₹15 lakhs and a solvency requirement of ₹5 lakhs—similar to the PWD's norms.
It is perplexing that the Punjab Water Resources Department has chosen to increase the solvency certificate requirement fivefold, especially when the government is actively promoting Start-Up and Stand-Up India policies to encourage entrepreneurship and reduce unemployment. Such policies aim to empower small businesses, yet this decision appears to do the opposite—discouraging new entrants and limiting job creation.
I urge the Hon’ble Chief Minister of Punjab, Sh. Bhagwant Singh Mann; the Water Resources Minister, Sh. Barinder Singh Goyal; and Principal Secretary & Finance Secretary Mr. Krishan Kumar, IAS, to review this policy. The Department should consider forming an "E-Class" contractor category to ensure that small firms can continue to participate in public projects and contribute to employment generation in Punjab.
*Author is a Jalandhar-based freelance journalist
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